A Study On The Development Strategy Of Hong Kong RMB Offshore Financial Center

With the scope of cross-border RMB settlement continuously expanding and RMB internationalization process further deepening, Hong Kong became the first financial center starting to operate the offshore RMB business. Financial Center and free financial market, the unique geographical location and special political system makes Hong Kong the best place as RMB Offshore Financial Center. At the time when Chinese financial market has not yet fully opened while when global financial centers aspire to become RMB offshore centers, how to develop Hong Kong RMB Offshore Financial Center has become a key problem.Based on the financial theory on offshore finance and by analyzing the reasons why Hong Kong RMB center is established and its effects, comparing four major offshore financial centers and exploring the factors that influence RMB deposits in Hong Kong through empirical method based on the research of the current situation of Hong Kong RMB center, This paper induced Hong Kong RMB Offshore Financial Center Development strategy from four aspects.Offshore Financial Center is a special financial center which provides non-residents groups with convenient and low-cost financial services. There are some basic theories about offshore financial center such as the theory of financial innovation, financial liberalization and financial integration, the theory of aggregation effect and scale economy theory.There are two reasons why RMB offshore center is established in Hong Kong:firstly, Hong Kong, as the host government, surely hope to further develop its economy and enhance its status as a financial centre, secondly, mainland China, as RMB issuing country, takes into account advantages of Hong Kong such as location advantages, special political system, financial human resources and developed financial Center and the fact that the onshore RMB market is not yet fully marketized. The establishment of Hong Kong RMB offshore center has positive effects on the economic and financial development of Hong Kong, the development of mainland enterprises and RMB internationalization. And its challenges and risks on onshore RMB financial market are controllable during the first stage of development.This paper compared the development of four largest offshore centers (London, New York, Tokyo, Singapore) from aspects of types and features, internal and external causes of development and business scopes, and then found out that there are four points important for developing Hong Kong RMB offshore center, which are the selection of major transaction-currency, the complete structure of offshore financial market, the offshore center policy and currency flow-back system. And we can develop Hong Kong by drawing lessons from the above four enlightenments.RMB deposit in Hong Kong is an important factor that related to the Hong Kong offshore RMB market development. In consideration of current situation of the Hong Kong offshore RMB center, this paper used empirical methods to study and found that when RMB foreign exchange rate against U.S. dollar falls, or Hong Kong the RMB deposit rate rises, the RMB deposits in Hong Kong increase, while HIBOR show a negative correlation against RMB deposits in Hong Kong.In a summary of formative reasons and effects of Hong Kong RMB center, enlightenments from the development of four major offshore financial centers and influential factors of RMB deposits in Hong Kong, this paper put forward strategy in four aspects about the development of Hong Kong RMB offshore financial center which is developing Hong Kong RMB offshore financial center and expanding the scope of it, establishing and improving the offshore RMB backflow mechanism, setting up the offshore RMB extracorporeal circulation mechanism and building Hong Kong as global offshore RMB center.